On the hourly chart, the GBP/USD pair on Thursday rebounded from the 1.2865 level, reversed in favor of the pound, and rose above the 1.2931 level, which carries no weight under horizontal market conditions. Today, the upward movement continues toward the 127.2% Fibonacci level at 1.3003, although the news background has been more supportive of bears. However, the bears remain very weak, especially following Donald Trump's new tariffs.

The wave structure is absolutely clear. The last completed downward wave did not break the previous low, while the last upward wave exceeded the previous high. This indicates the continuation of a "bullish" trend. The pound has shown very strong growth lately, although the news background has not been strong enough to justify such aggressive buying. Yet most traders are unwilling to buy the dollar regardless of economic data, as Donald Trump continues to impose new tariffs that could eventually harm U.S. economic growth and that of many other countries.

The news background on Thursday undeniably supported the bulls. On Friday morning, the UK released two reports that, in my opinion, did not carry any real positive weight for the pound. Retail sales volumes in February rose by 1% m/m and 2.2% y/y, significantly above trader expectations. At the same time, UK GDP showed a 0.1% q/q and 1.5% y/y increase. I view these as relatively weak figures, though they did slightly exceed forecasts. Thus, bulls have received support from news for the second day in a row, but the overall state of the UK economy still raises many questions. The pound's ongoing growth also appears increasingly anomalous. Since March 6, the pair has been trading between 1.2865 and 1.3003, making it more reasonable to consider the current trend a sideways channel. However, with such news, the bulls could quickly break through the 1.3003 level.

On the 4-hour chart, the pair continues its upward movement. I do not expect a strong decline in the pound until the quotes close below the ascending channel. A rebound from the 38.2% Fibonacci level at 1.2994 could work in favor of the dollar and lead to a decline toward the 50.0% retracement level at 1.2861. However, I believe the recent drop has been too weak to reestablish a "bullish" trend immediately. A firm hold above the 1.2994 level would increase the likelihood of further gains.

Commitments of Traders (COT) Report:

Sentiment among the "Non-commercial" trader category became more "bullish" over the last reporting week. The number of long positions held by speculators increased by 1,155, while short positions rose by only 946. Bears have lost their advantage in the market. The gap between long and short positions now favors the bulls by nearly 30,000: 96,000 vs. 67,000.

In my opinion, the pound still has downside potential, but recent developments could trigger a long-term market reversal. Over the last 3 months, long positions have decreased from 98,000 to 96,000, and shorts from 78,000 to 67,000. More importantly, over the past 7 weeks, long positions have grown from 59,000 to 96,000, while shorts have fallen from 81,000 to 67,000. I'd like to remind you—these have been "7 weeks under Trump's rule"...

News Calendar for the U.S. and the UK:

UK – Retail Sales Change (07:00 UTC) UK – GDP Change (07:00 UTC) US – Personal Consumption Expenditures Price Index (12:30 UTC) US – Personal Income and Spending (12:30 UTC) US – University of Michigan Consumer Sentiment Index (14:00 UTC)

Friday's economic calendar includes five entries, with the two most important already released. The impact of the news background on market sentiment in the second half of the day may be moderate.

GBP/USD Forecast and Trader Tips:

Selling the pair was possible after a rebound from the 1.3003 level on the hourly chart with targets at 1.2931 and 1.2865. All targets were met. Buying opportunities were present upon a firm hold above 1.2931 on the hourly chart or a rebound from 1.2865. Currently, the movement is largely horizontal, so a solid break above 1.3003 will be difficult for the bulls today.

Fibonacci levels are plotted from 1.2809 to 1.2100 on the hourly chart and from 1.2299 to 1.3432 on the 4-hour chart.